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A Paralysis of Two Way Thinking

Far be it from me to enter into debate with a Nobel Laureate, but something struck me about Paul Krugman’s column in the May 25thNew York Times. His point is that California is in a state of paralysis because of “the political systems inability to rise to the occasion.” He concludes that the “seeds of California’s current crisis were planted more than 30 years ago, when voters overwhelmingly passed Proposition 13, a ballot measure that placed the state’s budget in a straitjacket,” meaning property tax rates were capped. Of course, it is unrealistic to think you can keep having all kinds of neat stuff and not pay for it, which is the case in California and many other states as well. California’s immediate problem may lie in the inability to raise taxes, but isn’t the ultimate problem the spending that got the state into this mess? Why is it when a government gets itself into a financial mess, the answer is always raise taxes, which of course only continues the spiral of spending because when times improve the taxes do not go down, but the spending continues. Mr. Krugman sees the problems that plague California as applying at the national level too, presumably, he also means that taxes cannot be raised fast enough rather than we are also spending ourselves into a new financial crisis a few years hence.